In Egypt, government and poor struggle with troubled economy
in Old Cairo district on Feb. 19.
CAIRO – A group of women stands in front of a vegetable vendor at a street market in one of Cairo’s oldest neighborhoods, yelling in frustration.
“Every day there are new prices,” one said. “When will this war end?” another shouted, cradling a baby in her arms.
Russia’s invasion of Ukraine, now in its second year, has pushed up food and energy prices worldwide, adding another layer to Egypt’s economic crisis. Soaring inflation, a severely weakened currency and other problems have followed decades of government mismanagement and broader disruptions, starting with the turmoil from the 2011 Arab Spring popular uprising, then years of militant attacks, followed by the coronavirus pandemic and the war in Ukraine.
The crisis has pushed many Egyptians out of the middle class, while the country’s poor – about onethird of the population – are cutting back on life’s essentials. Many are asking how long they can survive like this.
Hany Hassan has found himself struggling to feed his four school-age children. His pay from his job as a bartender at a coffeehouse is buying less and less.
“This past year was the hardest in my life,” said
Hassan, 43, who earns roughly $110 a month working 12-hour shifts seven days a week. “I am scared that one day I won’t be able to feed the kids.”
Annual inflation reached 26.5% in January, the highest in five years, with food prices in urban areas soaring 48%, according to official figures.
Many essentials including rice, cooking oil, bread and most recently, eggs, have all doubled in cost in Cairo’s supermarkets. The prices of 1 kilogram (about two pounds) of chicken or other meat have almost doubled from a year ago, hitting 300 Egyptian pounds (roughly $10) for meat and nearly 90 Egyptian pounds (roughly $3), for chicken.
The surge has made those proteins a prohibitive luxury for all but the wealthiest.
The war in Ukraine, which rattled the global economy, hit Egypt where it is financially vulnerable. The most populous Arab country and world’s biggest importer of wheat needs to buy a majority of its food from other countries to help feed its population of more than 104 million.
“It is, therefore, important to view Egypt’s inflation problem within the context of its broader external position issues,” said Callee Davis, an economist at Oxford Economics Africa.
Egypt’s import bill first ballooned because of higher global prices for commodities like fuel and wheat that are purchased in dollars, and this led to foreign currency shortages, Davis said. That forced the Central Bank of Egypt to pass policies to preserve the country’s foreign reserves, including restrictions on imports, which drove inflation even higher, Davis said.
The war also has slowed Egypt’s economic growth. In February, the European Bank for Reconstruction and Development revised its forecasts for Egypt’s growth this year to 4.3%, down from its previous projection of 5%.
For many, hardships started in 2016 when President Abdel Fattah el-sissi’s government embarked on a reform program intended to reverse longstanding distortions in Egypt’s economy in return for loans from the International Monetary Fund. The program introduced new taxes and included substantial cuts in state subsidies on basic goods – a policy that dated back decades.
Western governments and international financial institutions hailed the austerity measures. However, they have made life difficult for regular Egyptians. El-sissi has blamed the war in Ukraine for the most recent inflation spike.
“Circumstances are tough for all the world. This crisis is not ours,” he said in a recent speech.